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Bird flu outbreak affects costs, supply

June 5, 2015

Restaurateurs are facing a shortage of eggs and egg products that could last two years, following the outbreak of a strain of avian flu that has decimated about a third of egg supplies in the United States, according to United Egg Producers officials.

The outbreak, first detected on egg farms in late April has spread to 20 facilities in Iowa, Minnesota, Nebraska, Wisconsin and South Dakota. The affected egg farms represent about 10 percent of all so-called “layer hens” in the United States and 30 percent of layer hens whose eggs go to egg products, such as liquid eggs, powered eggs and egg yolks.

UEP said 35 million layer hens have been euthanized so far after testing positive for this strain of avian flu.

Chad Gregory, UEP’s president and CEO, said the challenge is no one yet knows how the virus is spreading or how to stop it.

“No one knows if it’s by mechanical transfer through vehicles, through employees or outside crews, or if it’s being transmitted from one farm to another.”

Eggs are safe to consume, he said.

“This infection is not a public health concern and has not affected any humans to date, as confirmed by the CDC,” Gregory said. “It also is important to know that avian influenza cannot be transmitted through safely-handled, properly cooked eggs.”

Rick Brown, executive vice president for commodities analyst Urner Barry, said the shortage is affecting foodservice operators who primarily rely on liquid eggs and egg products. He said many operators are now looking at switching to egg substitutes and shell eggs where possible.

“Bakeries … are starting to hand-break shell eggs again,” he said. “This is something they had gotten away from, for convenience sake,” but many are now revisiting this option.

Since the outbreak, the price of shell eggs has steadily risen, up 120 percent since late April, while raw materials for egg-products, or breaking stock, have spiraled up 273 percent.

At Corner Bakery Cafes, Ric Scicchitano, the company’s senior vice president of food and beverage, said the outbreak would have an impact on food costs. He said most operators won’t have a choice but to bear the extra expense.

“It’s going to create a headwind for our P&Ls and cost us more money simply because there is less supply out there,” he said. “Because it may take as long as 24 months for the egg industry to recover, we’re going to be in this for a bit of a long haul. We’re doing everything we can to not impact our guests and so far have not made any adjustment to our breakfast offerings. Our customers will still get their eggs on the plate.”

Scicchitano added that companies that supply or sell a lot of baked goods, sweets and other egg-intensive products dependent on liquid eggs as their main component would be most affected.

UEP director of food safety Oscar Garrison said the U.S. Department of Agriculture and Food and Drug Administration are looking at ways to boost imports of shell eggs, potentially from the Netherlands and Canada, to ward off shortages in the coming weeks and months.

Garrison also said meetings with USDA Secretary Thomas Vilsack and the FDA have resulted in recommendations that would increase egg producers’ already-robust biosecurity measures. In addition, the agencies are working with scientists and UEP on an epidemiology report to determine the virus’ spread and why it is so virulent.

He added that a vaccine is under development but is likely months away from being commercially available.

The National Restaurant Association and the Center for Food Integrity will host a webinar June 8 on avian Influenza and its impact on the marketplace. Register here

Listen here to a briefing on Avian Influenza by the American Egg Board and United Egg Producers